Nearly 450,000 third-generation Prius models were recalled earlier this year amid claims the brakes could fail to properly function when the car switched between petrol and electric mode or was driven on particularly slippery or bumpy roads.
The issue has caused a sales slump for Toyota with the US market -- the Prius' single most important market -- recording a 40 per cent fall in Prius purchases.
Reports from Tokyo say Toyota will trim 10 per cent from Prius production levels to meet the slowing demand. Prius production reached a peak output of 50,000 units per month back in October 2009 after going on sale in May the same year. It's understood that figure will now be pared back to around 45,000 units a month.
In the Prius' home market of Japan, the petrol-electric hybrid has been a sales success, and thanks to state subsidies and tax incentives, has topped the nation's best seller list for the past nine months.
"The outlook for Prius demand is uncertain," a Toyota spokesperson said.
In the US regulators are investigating more than 60 reports of customer issues with the Prius' braking system as Toyota's investigation of the problem continues.